The AEA Job Market (The Job Market for Junior Economists) Congestion can arise at three different stages in the market process: • Interviews (departments have a limited number of interview slots) • Flyouts • Offers
AEA ad hoc Committee on the Economics Job Market The ad hoc Committee decided to introduce a signaling mechanism for the Economics Job Market in 2006. The Committee: Alvin E. Roth, Chair, John H. Cawley, Phillip B. Levine, Muriel Niederle and John J. Siegfried; with help from Peter Coles, Ben Greiner, Jenna Kutz
Survey to Dept. Chairs, Students • In the winter and spring of 2005, a number of department chairs, as well as graduate students on the market in 2005, were polled on such a signaling device.
Survey results on Signaling Mechanism Questions to students: Would you have welcomed such a signaling mechanism? (Yes: 86%) Do you think it is helpful in general? (Yes:86%) Questions to Departments: Do appropriate schools sometimes decline to interview […] some of your students because they view them as excessive long shots (even though your assessment suggests otherwise)? Yes: 83% Would signaling [..] help alleviate the problem in some cases? Yes: 79% Would students benefit from such a system? Yes: 86% In both cases, most negative opinions thought it is useless, as such mechanism are already in place through the advisor and letters.
Congestion in Interviews Which schools will experience congestion, and therefore take the signals they receive into account? Which applicants will be affected by congestion in interviews? What we aim to achieve: • Help to alleviate “falling through the cracks” • Help to solve the coordination problem of a few people collecting lots of interviews, while similar candidates do not • Help candidates to receive interviews at the places they are interested in.
Stylized “facts” about the economics job market Preferences over students, schools are correlated. Which schools do most likely not experience congestion? The top schools. Others may experience two kinds of congestion • Most preferred candidates may be unlikely to accept an offer. ( -> Truncation at the top). • A number of candidates may be similar, and the department has to decide which one of those to interview. (-> Randomization among candidates, truncation at the bottom).
Truncation at the Top A department may want to interview some, but not all top candidates. Most likely, some top applicant will not receive a top job offer, and may be interested in a job. In deciding which top applicant to interview, a department may be interested in knowing (i) that the candidate would be somewhat interested, (ii) not all other schools of the same “rank” also interview that specific applicant. →Top applicants: Send a signal to your 2 most preferred “safety” schools?
Coordination among a set of similar candidates at the bottom A department deciding who to interview in their “last interview” slots, may be somewhat indifferent among a set of applicants. This indifference can be broken by information about the applicants’ willingness to accept an offer. In each of these two cases (coordination problem at the bottom, truncation at the top): Departments use the signal among applicants that are as good, or better, than ones they would interview anyway.
Interviewing “inferior” candidates Departments might worry that none of their applicants will be available, and hence interview “safety” candidates - candidates worse than their other interviewees. However, inferior candidates may be abundant, so that a signal as confirmation of interest may not be necessary. Also, many places have a lot of “locals” that they have information about, in case they are really in need of filling a spot.
Discovering Adequate Applicants: “Opening the File” One other way a department may respond to a signal is by “opening the file” and discovering a viable applicant they overlooked. Signaling as a way to receive attention (but still not conveying information about one’s type above and beyond what is available once the application has been reviewed)
To whom to send a signal Hot Shots: Signal to the somewhat lower ranked schools you like the most and you think should like you (but may worry you’re not *really* interested.) Everyone else: Two Congestion problems. • Coordination problem: Some schools may not interview you, but instead others of similar quality, simply because there are a lot of applicants • “Truncation at the Top” problem: Some lower ranked schools you like and think should like you may not interview you, as they normally do not get such good candidates as you In each case: Signal to a department that interviews candidates of similar or worse “quality” and that may decide to interview you because they sent a signal. A signal for the “long shot” will probably not be useful.
Market Design Problem How can we increase chances that the signaling mechanism works well? Making the former statements common knowledge, see the statements on the JOE website: http://www.aeaweb.org/joe/signal/
The Groucho Marx problem “PLEASE ACCEPT MY RESIGNATION. I DON'T WANT TO BELONG TO ANY CLUB THAT WILL ACCEPT ME AS A MEMBER.” -Julius Henry (Groucho) Marx Might signals convey to schools candidates’ “unworthiness?” Assumption: Candidate has private information, above and beyond what can and is conveyed in letters and by the job market paper about their “true” ability…
Should you use the signaling mechanism? Right now, we do not allow participants to signal that you did not send any signal. (this could be achieved by listing on the JOE website all candidates who have participated in the mechanism.) However, with only 2 signals, the advantage of someone who sent no signal, may not be that important.
The “Double Signal” (letter to the AEA) To whom it may concern: I have a question regarding the job market signaling process which does not appear to be addressed on your webpage. If I choose to send both of my signals to the same institution…
How does the Signaling (mechanically) work: “From November 20 until December 4, shortly after the December JOE comes out, each applicant on the economics job market can designate no more than two departments (or other employers) to whom to send a signal of particular interest. On December 6, the AEA will transmit these signals.” (see JOE website at http://www.aeaweb.org/joe/signal/)
Results: 2008 Job Market Who Signaled? • Total # signalers 1021 • Total # signals 2011 • Total # employers signaled to ~600
Demographics Country (of Degree 83% US Granting Institution) 17% Intl Degree 98.5% PhD 1.5% Other Field 97% Economics + subfields 1% Finance 2% Other
Follow-up Surveys • Questions about # applications, interviews, strategy etc. Key Question (Control Group): “If you could have sent a third signal, where would you have sent it?”
Additional Analysis: Signal Flow • Rank signalers/employers by reputation, observe direction of signals • Mobility • Geographic trends (cities, pairs of signals)
Next? • Final survey: Flyout, Offer, Acceptance Hit rates • “Elite” vs non-elite schools • Teaching, Intl Schools • Overall measure of social welfare? • Suggestions?
Conclusions • Signaling may alleviate congestion for non-elite schools and all students, b/c signals are • Scarce • Credible • Equitable • Improvement? Early evidence appears favorable. Hopefully many newly employed (or employing) persons will agree.